Gold in 2024: A Year of Divergent Demand and Resilient Appeal

The global gold market in 2024 has been shaped by a mix of contrasting trends and shifting dynamics, reflecting both the evolving priorities of central banks and the changing preferences of consumers. Central bank demand for gold remained a pivotal force, with Poland emerging as the surprising leader in purchases for the year. Poland’s central bank acquired a staggering 89.5 tonnes of gold by November, far surpassing traditional heavyweights such as China, India, and Turkey. While China resumed buying gold in November and December, purchasing a total of 14.3 tonnes during those two months, its cumulative purchases for the year, at 33.9 tonnes, remained modest compared to Poland's total. India and Turkey also made significant contributions to the market, consistently purchasing gold every month, bolstered by ongoing efforts to hedge against currency devaluation. Collectively, Poland, Turkey, India, and China accounted for an impressive 72% of total central bank gold demand, which reached 270.8 tonnes by November. These patterns highlight the growing importance of gold as a tool for reserve diversification, particularly for nations grappling with currency weaknesses in the face of the U.S. dollar’s relative strength.

China’s return to gold purchases, while notable, reflects a more cautious and strategic approach compared to other nations. The yuan’s rally since October allowed China to delay significant acquisitions earlier in the year, unlike India and Turkey, whose currencies remained under persistent downward pressure. This divergence underscores the broader economic and geopolitical forces shaping central bank behavior, where gold is increasingly seen not just as a store of value but as a critical hedge against both inflationary pressures and geopolitical instability.

On the broader investment front, gold’s behavior in the face of rising bond yields has defied traditional expectations. After a sharp decline in U.S. 10-year bond yields earlier in the year, they rebounded to 4.67% by year-end, coinciding with geopolitical shocks such as Donald Trump’s re-election and lower-than-expected likelihood of Federal Reserve rate cuts. Historically, such an increase in bond yields would weaken gold’s appeal as a non-yielding asset. However, inflation fears, cautious central bank rhetoric, and mounting geopolitical uncertainty have instead supported a sharp rise in gold prices. In December, gold climbed steadily from $2,615/oz to $2,697/oz despite the market’s adjustment to higher yields. This unusual dynamic reflects the heightened role of gold as a safe-haven asset, even as traditional drivers like bond yields lose some of their predictive power in this volatile environment.

Consumer demand for gold, however, painted a far more regional and fragmented picture. While Asian buyers continued to purchase physical gold at record levels, buoyed by cultural preferences and growing wealth in the region, Western investors retreated. In the U.S., the Mint recorded a staggering 59% drop in gold coin sales compared to 2023, selling only 412,000 ounces of gold throughout 2024. This decline contrasts sharply with the previous year’s one million ounces sold and highlights how record-high prices in 2024 deterred Western investors from entering the market. The U.S. Mint’s performance mirrors that of the Perth Mint in Australia, which experienced a 41% drop in sales. However, secondary markets for bullion remained robust, as many existing investors sought to capitalize on the elevated prices by offloading their holdings. Danielle Oliari of CNT Depository observed strong activity in the secondary market, emphasizing its importance in meeting demand amid weak primary production.

Breaking this downward trend, the British Royal Mint saw a notable resurgence in demand throughout the year. Revenue from bullion coin sales rose 47% in 2024 compared to 2023, with the final quarter proving particularly strong. A 56% increase in sales during the last three months of the year underscored heightened interest in safe-haven assets amidst economic uncertainty and geopolitical tensions. Furthermore, a 12% annual increase in overall bullion transactions on the Royal Mint’s website signals a renewed focus on tax-efficient investing and strategic portfolio diversification among UK consumers. This divergence between declining U.S. and Australian sales and surging British demand demonstrates how regional economic conditions and investor sentiment can significantly shape gold market trends.